Lessons can shift how you think about money

Someone asked me if I had any tips to share with a high school graduate.

Here are some bits of knowledge I would share with them.

Live below your means: Financially successful people spend less than they earn. That takes self-control and discipline. If you get a better job or a nice pay increase, keep your current lifestyle and save the increase.

Debt is servitude: Financial freedom is being debt free. When you borrow money or charge on a credit card you have taken on an obligation requiring you to commit some of your income to a creditor. Debt doesn’t allow you to gain wealth or increase your net worth.

Pay yourself first: Learning to pay yourself first is an important part of financial security. Put 5-10 percent away out of each paycheck automatically into a retirement plan or savings account and put the magic of time and compounding interest to work for you. It will also help fight the temptation of spending every dollar you have access to.

Understand the difference between wants and needs: You have a lot of choices and advertisers know consumers buy things they want. So focus on what you need rather than what you want.

Develop some clear financial goals: Many times our financial goals are too broad - buy a house, save for retirement or keep the bills paid. To succeed financially you need to be more specific and have a plan to work on a daily basis to accomplish those goals. For example, what kind of car meets your needs? How much of a down payment do you need? Why are you saving? How much do you want to save? Answering these questions will help motivate and form your financial decision-making.

Learn from others mistakes: Take a look around you. You know people who have made mistakes. Learn from them. Take a look at options around you and think about the financial impact on your life - now and in the future. Learn from other peoples experience and try to avoid those mistakes. For example, a seven-year car loan may give you a lower payment, but you are committed for seven years. Think about the fact that the average credit card interest rate is more than 17 percent - f you don’t manage it carefully you could get yourself into some high cost debt.

Know what you can afford: Other people will always try to decide what you can afford, from credit card companies to car dealers, from restaurants to realtors. Don’t let someone else tell you what you can afford. Be financially responsible and set your own personal spending limits. Decide for yourself what you can afford, what you’re comfortable with and what your priorities are. Be your own person. You will most likely find that your personal limit is much lower than what others say. Remember, you are in charge of making your money and you decide how it gets used.

Whether you’re graduating high school or from the school of financial hard knocks, these lessons can shift the way you think about money and that’s often the first step in changing your fortune.

Need answers to your financial questions? Email Ken King, former executive director of Family Service Association of Sheboygan, at ken_king47@yahoo.com. Family Service Association is a United Way agency.